Growing concerns and legal risks fuel Gold rally

Doubts Over the Independence of the Federal Reserve

Gold prices benefited from heightened market volatility at the start of the week, which stemmed from comments by Federal Reserve Chair Jerome Powell regarding the Trump administration (represented by the Department of Justice) launching a criminal investigation over renovation and refurbishment works at the Federal Reserve headquarters. Mr. Powell stated that opening a criminal investigation file was a result of his refusal to cut interest rates at the pace desired by President Trump.

It is worth noting that last year President Trump dismissed Federal Reserve Board member Lisa Cook; however, the Supreme Court reinstated her pending a final ruling on the legality of the grounds cited for her dismissal. The Supreme Court is scheduled to begin hearings on January 21 to consider the arguments of the involved parties.

Actions by the U.S. administration aimed at influencing monetary policy decisions have raised serious concerns regarding the independence of the Federal Reserve. These developments negatively impacted the U.S. dollar, dampened risk appetite, and pressured equity markets lower. They also prompted investors to reconsider their exposure to U.S. assets (a reassessment that had already begun after President Trump imposed tariffs last year). This reassessment has taken the form of greater diversification and increased allocations to traditional assets such as gold, which has also benefited from rising geopolitical tensions following President Trump’s threats of potential military action against Iran in response to the Iranian authorities’ crackdown on popular protests. Against this backdrop of heightened uncertainty, gold prices broke above the $4,600 per ounce level for the first time this week.

Submitted for Judgment

Markets are also awaiting this week the Supreme Court’s ruling on the legality of the comprehensive tariffs imposed by the U.S. president, which came into effect last year. It is worth noting that both the court of first instance and the appellate court previously ruled these tariffs unlawful. Markets are now awaiting the final verdict, which could either uphold the lower courts’ rulings (nullifying the tariffs and ordering the refund of collected duties to their payers, a scenario President Trump considers extremely difficult and potentially chaotic) or rule the tariffs lawful and maintain the status quo.

Notably, President Trump relies heavily on these tariffs as a source of funding for the federal budget, particularly as he plans to increase the U.S. Department of Defence budget to $1.5 trillion in 2027, representing a 50% increase compared with the amount approved by Congress for 2026.

Gold prices – Technical Analysis

Gold prices rose at the start of the current week, reaching an all-time high of $4,626/oz. At present, prices may be heading toward a test of the high end of the current trading zone located between $4,500 and $4,700. A daily close above $4,700 would signal strong bullish momentum and could pave the way for a continued advance toward the $5,000/oz level. In this case, close attention should be paid to the psychological resistance levels at $4,800 and $4,900.

Key levels in the opposite scenario

A daily close below $4,500 would indicate a weakening of bullish momentum and raise the possibility of a corrective move toward $4,250. In this scenario, attention should be given to the support level along the ascending trendline originating from the October 28 low, as well as the support level at $4,380.

Gold – Daily Price Chart

Chart Source: ADSS Platform